In any M&A transaction involving Indian companies, considering whether to impose an obligation on the seller to obtain a No-Objection Certificate (“NOC”) from the Indian income tax authorities under section 499 of the Income-tax Act, 2025 (“IT Act”) (erstwhile section 281 of the Income-tax Act, 1961) is often a key issue from a deal execution and risk allocation perspective. However, the complexities and challenges associated with obtaining an NOC often create friction between the buyer and seller. It is therefore important to understand the legal framework, the significance of obtaining the NOC, potential consequences of not obtaining it and the practical approaches generally adopted by the parties in M&A transactions.
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Authors:
Mitesh Jain, Partner
Jishaan Jain, Associate Partner
Shruti Desai, Senior Manager
Disclaimer: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.